CBN explains how revised bank’s charges will impact banking system

The Central Bank of Nigeria (CBN) has explained how the revised guide to charges will build an inclusive banking system.

The apex bank on Monday explained that its new directives bank charges is yet another move to build an inclusive banking system that adequately caters for the needs of the banking public, whilst preserving the financial sustainability of banks, other financial and non-bank financial institutions.

The Director, Corporate Communications, CBN, Mr. Isaac Okorafor in a statement on Monday said, the revision of the Guide to Charges and strengthening of the Consumer Protection Regulation was necessitated by continued evolution in the financial industry over the past few years, which has spurred innovation and the introduction of new products, channels and/or participants.

According to him, “These developments have made it imperative for continued vigilance by the regulatory authorities to ensure the protection of consumer rights as more individuals are financially included whilst encouraging market forces to increasingly drive pricing for financial products.

“The Guide will incentivize stakeholders, especially those making micropayments, to further embrace electronic banking channels, thus improving financial inclusion. It will also reduce the cost of banking services to customers to deepen access without much impact on the bottom line of regulated institutions under the purview of the Bank.

He highlighted the revised Guide that includes, “A graduated fee scale for electronic transfers to replace the current flat fee of N50. Accordingly transfers below N5,000 will attract a maximum charge of N10; transfer from N5001 – N50,000 -N25; and transfers above N50,000- N50;

“Card maintenance fee on current account has been removed as the accounts already attract account maintenance fee. Savings accounts will now attract card maintenance fee of N50 per quarter from N50 per month.

“Annual Card maintenance fee on FCY denominated cards is reduced to $10 from $20.

“Remote on us ATM charges are reduced to N35 after third withdrawal within a month from N65

“The charge for hardware token will on cost recovery basis subject to a maximum of N2,500 from previous maximum charge of N3,500;  Fee for SMS mandatory alert will be on cost recovery from the previous maximum charge of N4; Bill payment via e-channels will attract a maximum charge of N500 from 0.75 per cent of the transaction value subject to maximum of N1,200 and a new section on Accountabilities/Responsibilities and Sanctions regime to address instances of excess, unapproved and/or arbitrary charges.”

He noted that the Consumer Protection Regulations which are being released by the CBN alongside the revised Guide to Charges provides clarity on the roles and responsibilities of all participants in the industry.

He explained further that, “It sets out minimum standards on fair treatment of consumers, disclosure and transparency, business conduct, complaint handling and redress in order to protect the rights of consumers, hold banks, other financial and non-bank financial institutions accountable and preserve trust in the entire financial system.

“These innovations supported by a sound regulatory framework have indeed transformed the Nigerian financial landscape over the past decade which has driven financial inclusion (according to EFINA, financial inclusion increased to 63.2per cent as at December 2018 from 60.3per cent in December 2012) and the increased use of electronic payments across several channels by bank customers.

 “Data from the Nigeria Inter-Bank Settlement System (NIBSS) shows that PoS transactions increased by 4,692per cent between 2012 and 2018 from N48.46 billion to N2.3 trillion while electronic transfers increased by 1,967per cent from N3.8 trillion to N80.42 trillion. Paper-based cheque transactions declined by 32 per cent from N7.48billon to N5.03 billion.

“Similarly, statistics from NIBSS on electronic transfers from June to November 2019 show that number of transfers below N10, 000 accounted for 61per cent of the number of electronic transfer transactions. This is a confirmation that the reduction of the charges for micropayments has huge potential for financial inclusion.”

 It would be recalled that the CBN at the weekend released two regulatory guidelines- a revised Guide to Charges by Banks, other financial and non-bank financial institutions, to replace the one issued in May 2017, and Consumer Protection Regulations to implement the principles prescribed in the Consumer Protection Framework issued in November 2016.